As St. Francis Hospital in Columbus continues to work through a deep financial crisis that threatens local control of the nonprofit facility, the chairman of the Board of Trustees confirmed late Wednesday that for the second time exclusive discussions with a potential buyer have broken off.
“All prior conversations regarding potential partnerships with the hospital have ended,” Board of Trustees Chairman Richard “Bo” Bradley stated in an email response to questions from the Ledger-Enquirer.
Since early April, St. Francis had been in “exclusive discussions” with a subsidiary of Franklin, Tenn.-based Community Health Systems. It was a deal that became necessary when a similar agreement fell apart. In January, St. Francis announced it was in exclusive discussions with Atlanta-based Piedmont Healthcare, a nonprofit organization like St. Francis. By early March, St. Francis and Piedmont had mutually agreed to open the search process back up.
A Community Health Systems executive has not responded to repeated efforts for a comment on the status of the discussions. Community Health Systems is a publicly traded company on the New York Stock Exchange.
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On Tuesday, St. Francis declined to answer any questions about the potential deal with Community Health Systems or any possible new suitors.
Though St. Francis has been guarded in what it says about a possible sale, a spokesman for Columbus Regional Health, a locally based nonprofit health care company, said that it had recently been in “high-level discussions” with St. Francis representatives, but they have broken off.
“We have had high-level discussions with St. Francis Hospital beginning late last year and as recently as three weeks ago,” said L.M. “Trip” Layfield III, a senior vice president and general counsel. “The discussion topic has been the financial challenges both our organizations face and our desire to ensure the continued viability of health care services to the community.”
While the talks took place, the discussion never reached a point where substantive information was shared, Layfield said. Layfield did not disclose who participated in those talks or the specifics of them.“St. Francis has focused on support from organizations outside of Columbus,” Layfield said. “Our focus continues to be on doing what is in the best interest of health and medical care for the residents of Columbus and the Greater Chattahoochee Valley area.”
Multiple sources have said that St. Francis is now talking to another Tennessee corporation, LifePoint Health of Brentwood, about a possible sale. When asked earlier this week if it was in talks with St. Francis, a LifePoint executive issued a carefully worded statement.
“St. Francis is a leading hospital that is clearly dedicated to providing quality care to the communities it serves,” said Michelle Augusty, LifePoint senior director of communications, in an email late Tuesday. “While we cannot comment on their process, we commend the board and management team for the work they have undertaken to align themselves with a strategic partner for the future.”
Before saying that all previous talks were off, St. Francis issued the following statement from Bradley late Tuesday afternoon: “St. Francis continues to have strong volumes and revenues. The board, physicians and associates continue to be focused on delivering quality care to patients. All groups are dedicated to ensuring the hospital is operating to provide quality health care and extensive services to the community. The board appreciates the continued support of the community and looks forward to the future.”
St. Francis’ financial troubles surfaced late last year after the former chief administrator had denied the hospital was dealing with financial issues. St. Francis disclosed in November that it was in a nearly $30 million hole.
The hospital was coming off a $150 million expansion of its Manchester Expressway campus when management said it could not account for $29.7 million on its books. Calling it an accounting error, the company a few weeks later announced it was looking for a “strategic partner” to help put the organization back on stable footing. At that time, it reported having about 2,800 full- and part-time employees and an annual budget of $295.7 million.
In April, St. Francis had 2,721 employees and was filling vacant positions, according to a hospital spokesperson.
The hospital’s largest creditor is the U.S. Department of Housing and Urban Development, which has a hospital financing arm. St. Francis borrowed money from HUD for the expansion and to consolidate other debt. The hospital currently owes HUD about $220 million. St. Francis representatives are in regular communication with HUD, Bradley said in April.
Two of St. Francis’ top executives have left the company since word of the financial crisis became public. President and CEO Robert P. Granger’s resigned in March. Granger had been with the company for 10 years. Former Chief Financial Officer Matt Moore, who had been with the hospital for nine years and had previously worked with Granger at a South Florida hospital, was suspended Oct. 27 and “permanently relieved of his duties” Nov. 14.
Granger and the board of trustees had been operating for at least three years with reports that overestimated the hospital’s revenues and underestimated its expenses, Granger previously said.
Granger said that while he and the board thought the hospital was operating at a point that was break-even or better, it was actually losing money.